Author Archives: Rick Raymond

05/5/18

A Family-Business Crisis Of Perception

Family businesses are subject to a range of crisis that are unique to them; not encountered by non-family businesses. Here’s a common and potentially excruciating one:

The incumbent leadership of a family business may or may not be confident that the upcoming generation has the competence to lead the family business going forward. Members of the upcoming generation, on their own part, feel entirely confident that they have what it takes to successfully lead the business into the future. It’s a crisis of perception.

To bypass this perceptual disconnect, long-lasting multigenerational family businesses have structures in place that foster family and generational coherence:

  • Avenues for good communication: Perhaps the most important trait of successful family businesses. It seems easy but we all know it isn’t. Opportunities for family members to share stories about goals, plans, hopes, aspirations, dreams, challenges and even failures can foster a cohesiveness that avoids conflicting perceptions of confidence and competence.
  • Established values: Descriptors of ‘what’s important to us.’ Families who know and respect one another’s values are better able to sustain a vision for the family and the business that crosses generations.
  • Respect for the past: With an eye on the future. Successful multigenerational family enterprises know that each generation needs to determine a vision for the business under their leadership, while remembering and genuinely valuing what preceding generations accomplished. A place to begin engendering this respect may be writing the story of the family’s founder and telling it to all generations that follow.

These structures help to create a shared perception of what is real with regard to the readiness and competence of the family’s next generation to lead; and they also help build this competence long before the doubts and disconnects have a chance to arise.

 

04/20/18

Employment Policies In Family Business

In all social structures, policies provide a process for aligning an organization’s values with its actions. In family enterprises, where there is an overlap of family, business management, and ownership, a family-employment policy is one of more important policies a family can develop.

It can be difficult for family business owners to be objective about hiring—and firing—family members. The family-employment policy helps by providing an established process and procedure for hiring family members. It outlines the factors necessary for employment, and when applied consistently, helps family members understand their relationship to the business.

“The policy is intended to avoid conflict, and should focus on what is best for the company and should stay consistent for family and non-family members[1].” It sends a message that employment with the company is not a birthright–it must be earned.

For instance, the policy may specify that a family member must have gained experience and earned a promotion in an outside firm; achieved a certain educational level; be a good fit within the company, and have skills commensurate with the current market salary for a legitimate job opening.

The policy may also include a statement of philosophy such as: “We are a family committed to our members and descendants being responsible, productive, well-educated citizens who practice the work ethic and make constructive contributions in the local community and the world at large”[2], thereby reinforcing family values.

While all families are different, it’s clear that development of a family employment policy is dependent upon good communication among family members and between generations.

[1] Family Business Wiki. http://www.familybusinesswiki.org/Family+business+Policies

[2] Bork, David. 1991. https://www.aspenfamilybusiness.com/PDF/Sample_docs/Employment_Policy_Form.pdf

04/7/18

Developing Future Leaders

For family businesses to thrive through succeeding generations, the development of future leaders must not be left to chance. It’s the responsibility of the current head of the family business to recognize and nurture leadership qualities in members of the rising generations. Here are seven strategies for accomplishing this critical task: 

  1. Be a model of leadership yourself.
  2. Demonstrate honor and respect for family members who are leaders.
  3. Recognize that there are as many different leadership styles as there are leaders. Consider the differing yet effective leadership styles of Martin Luther King, Mahatma Gandhi, Eleanor Roosevelt, Malala Yousafzai, Oprah Winfrey, Stephen Hawking, Winston Churchill, General Patton, and Steve Jobs. Encourage the development of individual and innate leadership styles within your own family.
  4. Provide younger family members with opportunities to lead.
  5. Help them learn to identify leadership opportunities within and outside the family business.
  6. Encourage their involvement in leadership activities in a variety of life areas such as in school, in professional associations, in your community as well as in your family business.
  7. Encourage them to think in terms of what they want to accomplish for the family and the business.

Of course, it’s important for the head of the family and current leadership to monitor the path of potential next-generation leaders; to see where they succeed; where they struggle; to guide, correct and mentor them. The future of the family and the business will be in their hands.

03/11/18

Best Practices Common To Successful Family Businesses

“All happy families are alike; each unhappy family is unhappy in its own way”

—Leo Tolstoy, Anna Karenina

 I recently read, again, this first sentence from Anna Karenina. Thinking about the truth of this statement as it pertains to family businesses, I have found much inspiration in: Perpetuating the Family Business, 50 Lessons Learned from Long-Lasting, Successful Families in Business by John L. Ward—quoted liberally here—to present six best practices common among successful multi-generational family enterprises:

  1. Establish a shared Intention to become a multi-generational concern.

By establishing an intention we declare an objective and foster a determination to succeed. This creates a focal point around which family members can coalesce, facilitating the birth of a long-term vision for the family and the business. Critically, this established intent places the responsibility on each new generation of leadership to pass the business on to the next in better condition than that in which they received it.

  1. “…Develop policies for family participation in the business -before the need.”[1]

“Long before the second generation is ready to come into the business, for example, the first generation develops and writes down on paper an employment policy that sets forth the requirements for family members who want to join and move up in the business. And long before the second generation enters the business, the first generation puts on paper a policy that guides decision making on compensation and performance appraisal issues.”[2]

  1. “…Enduring family businesses work very hard at defining a Sense of Purpose.”[3]

“They ask and discuss such questions as: Why are we doing this? Why are we working so hard? Why are we spending the time to develop policies? Why are we exerting so much energy to prepare for the future?”[4]

  1. Build Processes

“The capacity of a family to deal”[5] continually and “effectively”[6] with issues as they come up “will be a function of its skills as a group to communicate, solve problems, reach consensus, develop win–win solutions, and collaborate.”[7] It is “all the thinking and meeting and discussing that family members do together to resolve issues.”[8]

  1. Next-generation responsibility and leadership starts with good parenting.

“…One of the things that we can never underestimate is how much good parenting affects the future of a family business. After all, what is a family business about if it is not about the next generation?”[9]

  1. “Communication is Indispensable.”[10]

“Successful families recognize how profound, complicated, and perilous–and rewarding –communication can be. Business families with a long history of success are families that work very hard at communication.”[11]  They do this by maintaining open dialogue between family members—sharing family stories, writing family newsletters and other creative strategies that work for them. “Some once-successful family companies that lost their ability to continue as family firms lay that to a lack of sufficient communication.”[12]

Each of these practices is a scaffold upon which to build an enduring multi-generational family business. They are easy to write about and difficult to achieve. But having examples of workable strategies set by successful long-established businesses takes the guesswork out of what is necessary and provides guidelines to the possible.

[1] John L. Ward, 2004. Perpetuating the Family Business, 50 Lessons Learned from Long-Lasting, Successful Families in Business, Palgrave MacMillan, p. 23

[2] Ibid, p. 23

[3] Ibid, p. 24

[4] Ibid

[5] Ibid, p. 26

[6] Ibid

[7] Ibid

[8] Ibid

[9] Ibid, p. 27

[10] Ibid, p.15

[11] Ibid

[12] Ibid

02/23/18

A Warrior Heart

In preparing this blog piece, I turned for inspiration to one of the most important books I read last year, Money and The Soul’s Desires: A Meditation on Wholeness by Stephen Jenkinson. I had gotten no further than the author’s ‘acknowledgements’ page when I came across a statement about his son that stirred images and a longing in me, both as a father and as a son: “My son, Gabriel shows me the grace of his brawny warrior heart. I remember him taking his canoe out through the mist alone, and I honor him and kiss his brilliant feet for finding their own brilliant way.”[i]

To be successful as a multi-generational family enterprise, we must be able to honor our children for finding their own brilliant way—for themselves, the family and the business under their leadership. While this places responsibility on the child for setting out to brave the mists of next-generation leadership, it places equal responsibility on parents for helping our children develop their own warrior hearts.

[i] Stephen Jenkinson, 2002. Money and the Soul’s Desires, A Meditation on Wholeness. Iron Gold of Mercy Publishers, Ltd., Ontario, Canada. Page xi.

 

 

 

02/10/18

The Future Begins With Intention

An intention to be a multi-generational family business is a requirement for becoming one.

At the Family Business Mastermind™ meeting this month, one of the participants spoke about the importance, to her, of preserving the hard work her parents put into growing the family business. She and brother were witnesses to the building of the business and it was a very large part of their childhood.

She mentioned that although she and her brother are pursuing careers elsewhere, she has come to see the significance and meaning the business has to each of the family members as a common bond between them, in addition to being a resource that has supported them financially.

She recognizes also that a transition will inevitably come about, and there has been very little discussion with her parents about the future. Her hope in attending the meeting was to hear of ways to preserve the integrity of the family and the business.

She was clear that her intention, through the glue of the family business, is to keep the family bonds strong between her and her brother, and to her parents who founded the business, and to extend them to future generations.

Her intention will supply the force to help her clarify and expand this vision. She conveyed that she will continue seeking answers. It was heartening to hear.

01/27/18

Time Together–Indispensable To Family-Business Success

What keeps venerable old families together?
They are, after all, only as strong as the roots that bind them.[1]

The above quote comes from a Dec 30, 2017 article in the NY Times that I had saved because in it I see an important message for all family businesses—a message that cannot be repeated enough.

The article, Keeping the Family Tree Alive https://www.nytimes.com/2017/12/29/your-money/family-business-wealth.html features descendants from three famous families: Sylvia Brown, whose family name adorns Brown University, Alessia Antinori who is a 26th generation member of the Italian wine making company bearing that name and Mitzi Perdue, heiress to the Sheraton Hotel chain, and widow of chicken magnate Frank Perdue.

For me, the overriding message is: members of successful family enterprises spend time together. Eating dinner together and vacationing together are examples. Time together helps family members embrace a common sense of purpose, create and sustain a culture of cohesiveness across generations.

It’s interesting to note that the representatives of the three families written about in this article are women. Women are typically perceived as the archetypical force for family cohesiveness. Considering that more family businesses fail because of family related challenges than business ones, the extent to which women participate in their family enterprises might justifiably be seen as a significant factor for failure or long-term success.

 

[1] Sullivan, P. (2017, December 29) Keeping the Family Tree Alive: Retrieved from https://www.nytimes.com/2017/12/29/your-money/family-business-wealth.html

 

01/23/18

Sharing your family story makes your business stronger

Guest Blog: By Sally Collings

“We have no direct access to historical truth … Our only truth is narrative truth, the stories we tell each other and ourselves.”
— Oliver Sacks, The River of Consciousness

A team of researchers who set out to analyze the business attributes of family-owned wineries in Germany came across a strange fact. They were studying 21 wineries that were, on average, 11 generations strong; the oldest dated back to the 10th century, when Vikings were still colonizing Europe. About half of these family wineries had continued to innovate across generations in areas such as growing new grape varieties or adopting the latest production technologies. The other half were more inclined to follow than to lead, only adopting new techniques or entering new markets after their competitors paved the way.

Among the attributes that distinguished the more entrepreneurial wineries, one in particular was somewhat surprising. These business families had what you could call an “entrepreneurial legacy story” that they shared from one generation to the next. It might be the tale of a great-great-great-great-uncle, say, who rode his horse to Paris so that he could attend an auction to buy back the family winery after it was seized by Napoleon. At family meals and festive gatherings, stories of persistence in the face of peril, theft, adversity and war were told over and over again.

What is the significance of that? “These stories give meaning to today’s entrepreneurial actions and put current risks and problems in a broader context,” Peter Jaskiewicz of Concordia University’s John Molson School of Business reasoned. “It is hard to complain about losing a customer knowing your great-grandparents overcame war and starvation to build the business.”

From speaking with both the current generation’s leaders and their children, the research team found that the families less inclined to innovate lacked pride in their ancestors’ achievements. They either did not know the stories, or they played them down as being simply a matter of chance with no enduring significance.

Who would have thought that stories could actively make a difference to the capacity for innovation? Of course, this correlation will not be confined to German wineries. Stories are the glue that hold any family together, and the mortar that makes a business strong going into the future. If the current leadership connects the next generation to their shared narrative, the result is a more cohesive unit with aligned values and goals.

When the Mouawad family celebrated 125 years in the diamond, jewelry and watchmaking business, they set about creating a book that would capture their heritage so that future generations could appreciate it, as well as providing insights for other families seeking longevity for their business. After completing the process, current business leader Fred Mouawad says, “By better understanding our history we were able to set a better trajectory into the future.”

Set aside some storytelling time at your next family gathering. It is far more than an indulgence for the older generation: it could be the difference that makes your family enterprise a leader in its field, rather than a follower.

Sally Collings (founder and CEO of Red Hill Publishing, specializing in writing books for family businesses and social enterprises)

01/15/18

Family Business—A Three-Way Balancing Act

Open up a family business and you will find within a three-way structure of dynamic subsystems; the family, the ownership and the business. These three must continually adjust to one another to maintain balance among themselves for their own health and that of the entire business. What’s tricky about that? Each of the subsystems has its own set of priorities.

Priorities for the Family subsystem are:

  • Harmony
  • Unity
  • Acceptance
  • Loyalty

Priorities for Ownership are:

  • Dividend Distribution
  • Stock Appreciation
  • Control

For the Business subsystem priorities are:

  • Growth
  • Profitability
  • Market Share
  • Innovation

Set out like this, it becomes easy to see where points of contention may exist as the systems’ moving parts meet and inevitably impact one another; where family harmony intersects dividend distribution; where innovation meets control; where market share runs aground of stock appreciation…

These are a just a few of the many ways these three subsystems can become unbalanced, creating inter-family conflict, operations slowdowns, loss of profitability and overall damage to the sustainability of the business and the family.